We expect Topline Fertiliser universe earnings to increase by 23% YoY and decrease by 28% QoQ in 1Q2026. The YoY surge is mainly due to dividend income from FFC’s energy business. However, during 1Q2026, urea offtakes decreased by 6% YoY and 59% QoQ, primarily due to advance buying in Dec 2025, when record-high discounts were offered. Additionally, the natural tapering of seasonal Rabi demand led to a sharp decline in 1Q2026 offtakes as the market utilised pre-stocked inventory.
§ Average urea prices during 1Q2026 increased by 1% YoY and down 3% QoQ to clock in at Rs4,407/bag. EFERT has maintained a discount of Rs150/bag during 1Q2026, which has now been rolled back, effective from April 04th 2026. Similarly, FFC withdrew the discounts effective Jan 2026, which had previously been in the range of Rs 100–120/bag. However, DAP prices have increased by 18% YoY and are down 2% Qo, averaging around Rs14,270/bay.
§ The sector’s turnover is expected to increase by 44% YoY and down by 48% QoQ to Rs135mn in 1Q2026. The YoY revenue improvement is attributed to the rollback of discounts. However, urea offtakes declined 6% YoY and 59% QoQ in 1Q2026 to 1.04mn tons. Whereas, DAP offtakes surged by 102% YoY and down 44% QoQ to 304k tons in 1Q2026.
§ The gross margins of the sector are expected to hover at 31.7% in 1Q2026, compared to 35.5% in 1Q2025 and 29.3% in 4Q2025.
§ Finance cost of the sector during 1Q2026 is expected to decrease by 21% YoY to Rs2.2bn primarily due to the lower interest rate environment.
§ Effective tax rate of the sector is expected to clock in at 39% in 1Q2026 vs 36% in 1Q2025. In absolute terms, the sector’s tax expense is expected to be Rs12.7bn in 1Q2026.
§ Engro Fertilisers (EFERT): EFERT is expected to post consolidated earnings of Rs2.95/share, up by 36% YoY and down by 53% QoQ in 1Q2026. The YoY increase in earnings is mainly due to lower finance costs and higher sales, compared with the base period of 1Q2025. On the other hand, the decrease on a QoQ basis is primarily driven by a 73% QoQ decline in urea offtakes during the quarter. Moreover, EFERT continued to offer discounts of Rs100-150/bag during 1Q2026.
§ Sales are expected to clock in at Rs37.1bn, up by 23% YoY and down by 63% QoQ, owing to the continued discounts and sharp decline in offtakes during 1Q2026. Gross margins are expected to clock in at 32.8% in 1Q2026 as compared to 35.3% in 1Q2025 and 27.7% in 4Q2025. Along with the result, we expect the company to announce a cash dividend of Rs3/share (Payout ratio: ~102%) in 1Q2026.
§ Fauji Fertiliser Company (FFC): The company is anticipated to report unconsolidated earnings of Rs 11.06/share, up 20% YoY and down 17% QoQ in 1Q2026. The increase in earnings on a YoY basis is primarily driven by higher dividend income of ~Rs4-5bn likely to be received from FFC’s energy business.
§ Sales are expected to clock in at Rs98.1bn, up by 54% YoY, amid higher YoY offtakes and absence of discounts during 1Q2026. However, sales are likely to decline by 38% QoQ in 1Q2026. However, gross margins are expected to be 31.2% in 1Q2026, down from 35.6% in 1Q2025 and 30.6% in 4Q2025. On a consolidated basis, FFC is expected to record earnings of Rs15.32/share, up 27% YoY from Rs12.09/share in 1Q2025, driven by higher contribution from core operations.
§ Along with the result, we expect FFC to announce a cash dividend of Rs8.00/share (Payout ratio: ~72%) in 1Q2026, respectively.
